Dedicated to Deposits: Deals, Data, and Discussion
DETAILSINSTITUTIONAPYMINMAXPRODUCT
Ally Bank1.10%--Raise Your Rate 2-Year CD
Learn MoreSponsored Note: No Minimum Deposit to Open. Consistently competitive rates. Member FDIC.
Northwest Federal Credit Union0.95%$500-2 Year Add-On Certificate
Ally Bank0.87%--No Penalty 11-Month CD
Northwest Federal Credit Union0.60%$500-1 Year Add-On Certificate
Accounts mentioned in this post. Rates as of July 24, 2014

Review and Survey of Flexible CDs

POSTED ON BY

Flexible CDs can be very useful to hedge against future changes in interest rates. One example is an add-on CD that allows you to make additional deposits during the CD term. This can be useful when there's a chance that rates will fall or stay low. When there's a chance of rising rates, the no-penalty CD and the bump-up CDs can be useful. The no-penalty feature allows you to make a penalty-free withdrawal. This can be very useful if interest rates shoot up.

In theory, the bump-up (or step-up) CD also allows you to take advantage of higher rates. The bank typically allows the depositor one or two options to bump-up the rate to match the current rate of a new CD with the same term. The problem with bump-up CDs is that it depends on the bank offering competitive rates in the future.

The problem with these flexible CDs is that you typically have to sacrifice a little on the interest rate. Also, there are not many banks or credit unions offering these. A few banks have either stopped offering these or have made large rate cuts. But flexible CDs still exist, and there are a few institutions offering these nationwide. Here's a short list:

Sample of Nationwide Flexible/Liquid CD Rates as of 4/26/2010:

  • Ally Bank Bump-Up & No-Penalty CDs: 1.99% APY 24-month Raise Your Rate CD (one-time bump-up option), 1.38% APY 11-month no-penalty CD
  • Northwest Federal Credit Union Add-On Certificates: 1.41% APY 12-month, 1.81% APY 24-month, $500 minimum, Unlimited deposits
  • Wilshire State Bank Flex CD: 1.40% APY 12-month, $10K min, $95K max, additional deposits and no-penalty early withdrawals with some restrictions (see account review)
  • Choice Financial RateBuilder CD: 1.55% APY 13-month CD, $5K min, add-on deposits up to the amount of the initial deposit allowed

OneWest Bank had offered some flexible CDs several months ago, but I don't see these listed any more. Other institutions may still be offering these, but the rates are very low. Examples include Bank of America's risk-free CDs, AmboyDirect's eSavings CDs and America Credit Union's Super Bump Flex CDs.

A reader just recently commented that America Credit Union was not letting him add more to his Super Bump Flex CD. However, other readers have reported that they have been allowed to make additional deposits. There have been cases in the past when credit unions and banks have tried to change the terms of add-on CDs before maturity. The latest example is Darby Direct (which changed positions after the FDIC got involved).

While these add-on CDs have been very useful for depositors, they've been costly to banks as interest rates fell to record low levels in the last year. One of my local credit unions had offered add-on CDs for all terms. Last year they changed the policy for new CDs. Only 12-month terms and shorter can have the add-on feature. Another common way banks use to limit their exposure is to cap additional deposits to the amount of the initial deposit.

Does your local bank or credit union offer flexible CDs? Please leave a comment if you know of any. On Sunday I reported on a Maryland credit union that's offering several good deals on flexible CDs (see review).


  Tags: CD rates, Ally Bank, Wilshire Bank, Northwest Federal Credit Union, Choice Financial

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Comments
Comment #1 by OC Steve (anonymous) posted on
OC Steve
With deposit interest rates perhaps going up a little in the near future, the benefit of add-on CD's is reduced. However, as the add-on CD term winds down, it may be beneficial to add other maturing CD balances to this declining term add-on CD to get more funds together for future CD's.

 

I have never been fully sold on bump-up rate CD's because you have to depend on the Institution to raise the CD rates for this special term in the future.  Also, the slightly reduced interest rate for bump-up CD's vs. similar non-bump-up CD terms assumes there is added value to this type of CD.  Not worth it for me!

 

OC Steve

5
Comment #3 by RoyGuthrie posted on
RoyGuthrie
Ms Sanchez,

 

Discover Bank is being investigated for its support of the Immigration Bill.  Reports show Dave Helms, Roger Hochschild and Carlos Minetti setting up a massive American drug cartel.  This was in anticipation of taking over American drug trading when illegal labor was stopped.  Discover was allegedly using depositers money and credit card accounts to fund drug trafficking.  Great business plan.  However, they were allegedly caught up in trouble while working with the other guys.

Good for Discover Bank and Card, its the American way to cheat people.

Ever notice that Discover Bank and Discover Card has only PO Boxes?  This is because a credit card PO Box is not subject to the same import/export laws that regular drug dealers have to respect.  Discover was looking to get around this and make drug tracking an international mail order industry using its own PO Box network in Atlanta, Salt Lake, Mexico City, New York and San Antonio.

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Comment #5 by AnY MOUSE (anonymous) posted on
AnY MOUSE
HAY ROY ANY RELATION TO ARLO IF SO THEN I KNOW WHY YOU ARE SO WELL VERSED ON THE TOPIC

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Comment #6 by RoyGuthrie posted on
RoyGuthrie
AnY MOUSE and AnonymousE,

 

I once worked with them...and yes, be very worried.  I left Discover for good.

My grandfather was also part of the military and USAA Bank - Insurance.  USAA has gone done hill and will likely fail soon.  Any retirees with investments should also be worried.

What happened to decent honest investment companies?

 

Best Wishes

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Comment #7 by roe gutheriy (anonymous) posted on
roe gutheriy
CITI WEALTH MANAGEMENT FOR BROKER ACCOUNTS ANFD IRAS THEY ARE THE BEST AND MOST HONEST PLUSS NO FEES LIKE WACHOVIA  UBS ET AL

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Comment #8 by Anonymous posted on
Anonymous
discover also has po box in dover delaware 7112

-4
Comment #9 by Anonymous posted on
Anonymous
why the worry fdic will cover any losses go out and have a cold one  

1